Issue when baking normals
Previously I pointed it out that you didn't smooth the object.  That's not the case, see update.

Update:

Your normal map is baked correctly.

I brought it to Blender Internal Render and this is the result.

Cycle has shading problem on lowpoly models.  Whether you smooth it or not, it will be rendered as if not smoothed.

I previously missed that point, too.  Your process isn't the problem.  Cycle is.